In August 2025, President Trump signed an executive order directing the Department of Labor to revise rules, allowing 401(k) pension plans to include alternative assets such as cryptocurrencies. This policy could unlock the door to the crypto world for the massive $8.7 trillion U.S. retirement fund pool, potentially triggering structural changes in the crypto market.

The table below summarizes the core components of the U.S. pension system, helping you quickly understand its overall structure and the critical role of the 401(k) plan.

Table data source: Compiled from ICI Q1 2025 data and public sources.

The 401(k) plan is the most prominent employer-sponsored retirement savings scheme in the U.S. private sector, characterized by:

• Tax Advantages: Employee contributions are pre-tax, reducing immediate tax burdens, and employers often provide matching contributions.

• Individual Account Management: Accounts are managed by employees, though investment options are typically pre-selected by employers.

• Massive Scale and Broad Coverage: As shown in the table, 401(k) assets are enormous, covering nearly 90 million American workers.

This policy shift aims to lift strict restrictions under the Employee Retirement Income Security Act (ERISA) on 401(k) plans investing in "alternative assets," including cryptocurrencies, private equity, and real estate. Trump’s executive order instructs the Department of Labor and other agencies to review and amend relevant rules, paving the way for compliant products.

If 401(k) plans open to crypto assets, the potential incremental capital is a key market focus.

• Even a 1% allocation of 401(k) funds to crypto assets could bring $87 billion in long-term incremental capital based on the current ~$8.7 trillion scale.

• Surveys from some financial institutions suggest financial advisors might recommend allocations of 2.5% or even 3%. André Dragosch, Head of European Research at Bitwise, considers a 1% estimate "relatively conservative."

• Assuming a 5% allocation, it could potentially bring over $400 billion.

Allowing 401(k) investments in cryptocurrencies signifies more than just capital inflow—it could drive profound changes across three dimensions:

1. Nationwide Shift in Public Perception: When mainstream retirement plan providers like Fidelity and BlackRock include compliant crypto investment options (e.g., spot Bitcoin ETFs) in 401(k) menus, it grants cryptocurrencies official and institutional endorsement. This significantly lowers the cognitive barrier and trust cost for average investors, especially those cautious about crypto, serving as low-cost, widespread market education that boosts mainstream adoption.

2. "Automatic Capital Pipeline" from Institutional Funds: Unlike Bitcoin spot ETFs, which rely heavily on active investor subscriptions, 401(k) capital injections could be tied to automatic payroll deductions. This means that every payday could see a portion of funds flow "seamlessly" and consistently into the crypto market. This "dollar-cost averaging" effect would provide deeper liquidity and greater resilience, smoothing out some volatility. Simultaneously, it would drive financial institutions to develop more innovative products, such as crypto index funds or hybrid funds tailored for retirement accounts and prudent investment requirements.

3. A Potential "Political Moat": In the U.S., policy uncertainty has long been a challenge for crypto market development. If millions of Americans’ retirement accounts are linked to crypto asset values, any politician attempting harsh crackdowns on the industry could face significant public backlash, as it directly impacts voters’ retirement savings. This deep alignment of interests could push both parties toward greater consensus on crypto regulation, fostering a more stable long-term policy environment and reducing regulatory risks associated with political transitions.

While opportunities abound, it’s essential to acknowledge the challenges and uncertainties:

• Investor Acceptance Is Key: Convincing ordinary people accustomed to traditional stock and bond investments to allocate their retirement savings to highly volatile crypto assets will take time and effort. Comprehensive investor education and risk disclosure are crucial.

• Volatility and Risk Control: The sharp price fluctuations of crypto assets conflict with pensions’ goal of steady appreciation. Thus, investment比例 limits, risk control measures (e.g., selecting less volatile products, rebalancing mechanisms), and clear rules are particularly important.

• Product Forms and Regulatory Details: What specific products will be used? (Spot ETFs are likely the first choice). How will investment scopes be defined? (Limited to Bitcoin and Ethereum or including others?). What will the fee structures look like? These await more detailed operational rules from regulators like the Department of Labor and the SEC. Full policy implementation will take time, likely progressing in "quarters."

• Lessons from Global Experience: The Ontario Teachers’ Pension Plan (OTPP) in Canada suffered losses due to its investment in crypto exchange FTX, reminding us that pension investments in crypto require extremely cautious due diligence and risk management.

The Trump administration’s executive order allowing 401(k) pension investments in cryptocurrencies marks a symbolic policy shift. It aims to build a compliant bridge between massive traditional retirement capital and emerging crypto assets.

• Its short-term significance lies in boosting sentiment and managing expectations, introducing the imagination of long-term incremental capital to the market.

• Its medium-to-long-term value lies in pushing cryptocurrencies further toward mainstream adoption and institutionalization, potentially subtly influencing the U.S. crypto regulatory political landscape.

However, the practical implementation effects of this policy still depend on subsequent regulatory details, product designs by financial institutions, and actual choices by the American public. It opens a new chapter full of potential, but the specific storyline remains to be written.

We hope this information helps you better understand this policy shift. If you’re particularly interested in specific types of crypto investment products (like ETFs) or how to assess related risks, we’d be happy to provide further details.